■ After a career in the railroad business spanning almost 40 years,
Richard K. Davidson became chairman and CEO of Union Pacific Corporation,
the United State's leading railroad freight carrier, in 1997.
Davidson strove to maintain the railroad's heritage while
continuing to modernize and move the company into the future. In 1997 he
brought Union Pacific through a much-publicized shipping crisis. As a
result of Davidson's investment in technology and focus on
customers, the company not only recovered but also thrived. A
straightforward Midwesterner with humble roots, Davidson's
philosophy centered around the concepts of continuous improvement and
solid customer service.

Richard K. Davidson.

AP/Wide World Photos

.

WORKING ON THE RAILROAD

Davidson began his railroad career in 1960. His father had died in 1948,
when Davidson was six years old, leaving the family with little money. To
pay for college, Davidson took a night and weekend job as a brakeman at a
Missouri Pacific railyard.

One of Davidson's most influential mentors was Downing Jenks, the
Missouri Pacific chairman. After a huge flood hit Texas, Davidson was up
to his waist in water, trying to fix a piece of washed-out track, when
Jenks came and stood by his side. "That really set a tremendous
leadership example of how you get out and just prove to everybody that
you're willing to work as hard as or harder than anyone else in the
company," Davidson recalled in
Chief Executive
(January 1, 2004).

In 1966, after graduating from Washburn University in Topeka, Kansas,
Davidson accepted a position as an assistant
trainmaster with Missouri Pacific in Shreveport, Louisiana. At the time,
the railroad was trying to modernize. Davidson helped oversee the railroad
upgrade, which was completed in 1971. Davidson was transferred to the
company's headquarters in St. Louis in 1975 to assist the vice
president of operations, Jim Gessner. When Gessner left in 1976, Davidson,
age 34, was promoted to his position. He joined Union Pacific in 1982,
when the company merged with the Missouri Pacific and Western Pacific
railroads.

In 1987 the Union Pacific president, Mike Walsh, asked Davidson to oversee
the implementation of a new corporate philosophy based on the tenets of
customer satisfaction and continuous improvement, a philosophy Davidson
carried with him throughout his career. He was appointed president and CEO
of Union Pacific Railroad in 1991. Only seven weeks later he was named
chairman and CEO.

A TRAIN WRECK

In 1997, just after he was named chairman and CEO of Union Pacific
Corporation, Davidson was faced with a massive shipping crisis. Labor and
locomotive shortages, a string of accidents, and a messy takeover of the
ailing Southern Pacific railroad had left Union Pacific trains in
gridlock. Coal was not transported to utilities, grain sat rotting in the
Midwest, and cars bound for Texas wound up in California. The situation
was called, aptly enough, a "train wreck" and was one of the
worst transportation crises in U.S. history. All in all, the logjam cost
Union Pacific customers $2 billion. The company's stock dropped by
nearly half between 1996 and 2000. But Davidson was not afraid to face his
critics. He traveled around the country, assuring investors and Wall
Street analysts that the company would recover and, even thrive, when
people began to realize the benefits of the merger.

Such straight talk was a hallmark of Davidson's persona. A simple
man with straightforward values, he preferred hunting quail to attending
cocktail parties. "You look at the other CEOs out there and a lot
of them are accountants or lawyers," Davidson told
Chief Executive
. "I think it's just my good fortune that I know what I
am—a son of toil."

BRINGING ABOUT A UNION PACIFIC RECOVERY

To deliver his promised recovery, Davidson knew that he had to lure back
customers. He spent $2.8 billion updating the company's computers
and other information technology systems and funneled hundreds of millions
of dollars into capital projects. He also decentralized the company,
transferring operational power from Union Pacific headquarters to three
regional offices and 22 service divisions reporting to those offices. As
part of his commitment to customer satisfaction, Davidson rolled out
dozens of new services, including the 1-5 Corridor, which expedites
freight along Interstate 5 from Seattle to Los Angeles. For a man accused
by many of having no vision, Davidson did a lot of forward thinking.

In 1998, just one year after the crisis, Union Pacific cars were rolling
smoothly again. In 2002, although the U.S. economy continued to falter,
the company had one of the best years in its history. The
"33,000-mile factory—with no roof," as Davidson
referred to his company in
Railway Age
(January 1, 2003), was growing steadily. By the end of 2003 Union Pacific
stock was back up to $65 a share.

Despite his rise to the top of the railroading industry, Davidson never
forgot what brought him into the business in the first place. "I
still get emotional when I get on a locomotive and listen to those
turbochargers kick in," he told
Time
magazine (August 23, 1993). Davidson was due to retire in 2006, and by
2003 he had already started the search for his successor.

In addition to his positions at Union Pacific, Davidson served as the
chairman of the Greater Omaha Chamber of Commerce, as a director at
Creighton University, and as a member of the boards of the Kroger Company,
the Boy Scouts of America, and the Capitol Visitors Center. He also served
as chairman of President George W. Bush's National Infrastructure
Advisory Board.

See also
entry on Union Pacific Corporation in
International Directory of Company Histories
.